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Cash and cash at financial institutions 51,130 45,229 26,999 20,258 Less: Cash at banks used as guarantee (18,892) - - - 32,238 45,229 26,999 20,258 The notes to the interim consolidated and company financila statments pages 14 to 27 form an integral part of these interim financial statments. Noble Development Public Company Limited Note to the interim consolidated and interm finnacial statments For the six-month periods ended 30 June 2000 and 1999 1 Principal accounting policies The interim consolidated and company financial statements are prepared in accordance with the accounting principles generally accepted in Thailand. However, the primary statements i.e. balance sheets, statements of income, changes in shareholders' equity, retained earnings and cash flows are presented in the full format as prescribed by the Ministerial Regulation No. 7 (B.E. 2539) in accordance with the Securities and Exchange Commission's and the Stock Exchange of Thailand's requirements,rather than in the condensed format as required by Thai Accounting Standard No. 41, "Interim Financial Reporting." The accounting policies used in the preparation of the interim financial statements are consistent with those used in the annual financial statements for the year ended 31 December 1999. The Group has implemented the following new Thai Accounting Standards, effective 1 January 2000, in these interim financial statements: TAS 43 - Business Combination TAS 44 - Consolidated Financial Statements and Accounting for Investment in Subsidiaries TAS 45 - Accounting for Investment in Associates TAS 47 - Related Party Disclosures The Comparatives have been adjusted or extended to take into account the requirements of those newly effective standards and have been reclassified for comparative purpose. Costs that are incurred unevenly during the financial year are recognised as expense or deferred in the interim report only if it would be also appropriate to recognise or defer such costs at the end of the financial year. These interim financial statements should be read in conjunction with the 1999 annual financial statements. Subsidiaries are companies that Noble Development Public Company Limited exercises control over the financial policy or operation to derive benefits from the operations. Subsidiaries included in interim consolidated financial statement comprise the following. Paid-up Percentage of holding Share capital By the group 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Principal Million Million Activities Baht Baht Percent Percent Wipa View Co., Ltd. Real Estate 200.0 200.0 100.00 100.00 Continental City Co.,Ltd. Real Estate 40.0 40.0 100.00 100.00 World Time Holding Co., Ltd. Real Estate 15.0 15.0 100.00 100.00 Bang Plee View Co., Ltd. Real Estate 10.0 10.0 100.00 100.00 Research & Consultant Co., Ltd. Real Estate 10.0 10.0 65.00 65.00 Ban Suk Sabai Co., Ltd. Real Estate 2.0 2.0 100.00 100.00 Ban Siam Co., Ltd. Real Estate - 102.0 - 100.00 Business segment and geographical segment information Noble Development Public Company Limited and its subsidiaries engages mainly in real estate developments for sale in Thailand. Revenues from other business segments are currently immaterial to the consolidated financial statements to warrant the presentation of business/geographical segment information. 2. Significant unusual items charged to operating profit (loss) The following items of unusual nature have been charged to the operating profit (loss) during the six-month periods ended 30 June 2000 and 1999. Consolidated Company 30 June 30 June 30 June 30 June 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 a) Gain from cancelled contract - 53,120 - 6,336 b) Debt forgiveness by construction contractor 17,171 - - - c) Gain from sale of investment 65,895 - 65,895 - a) In 1999, the Company and its subsidiary had cancelled certain sales contracts where the sales and cost of sales from these contracts were fully recognised. The deposits from these contracts were forfeited. b) During the first quarter of year 2000, a construction contractor of a subsidiary had forgiven the debt due to the contractor including the retention money amounting to Baht 19.27 million. As a result, the subsidiary recorded it as a reduction in cost of sales of Baht 15.36 million and gain from debt forgiveness of Baht 1.81 million. This resulted in the presentation of cost of sales in the consolidated statement of income for the six-month period ended 30 June 2000 having a credit balance of Baht (2.5) million. c) In June 2000, the Company sold an investment in Ban Siam Company Limited, a subsidiary which the company held 100% interest. Details of assets and liabilities of Ban Siam on the selling date are disclosed in the note to financial statements No 11. 3. Earnings (loss) per share Basic earnings (loss) per share is calculated by dividing the net profit (loss) attributable to common shareholders by the weighted average number of ordinary shares in issue during the period. (2000: 91,356,513 shares; 1999: 55,000,000 shares.) 4 Property and equipment For the six-month period ended 30 June 2000 Consolidated Company Property and Property and equipment equipment Baht'000 Baht'000 Opening net book amount, -As previously reported 230,276 96,895 -Prior year adjustment (Note 12) (82,898) (63,271) Opening net book amount, as restated 147,378 33,624 Additions 4,230 4,202 Disposals (62) (17) Sale of a subsidiary (Note 11) (25,909) - Depreciation charge (6,063) (3,473) Closing net book amount 119,574 34,336 5. Other assets Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Baht' 000 Baht' 000 Baht' 000 Baht' 000 Deposits for investment 36,000 36,000 36,000 36,000 Other assets 14,304 21,888 8,074 12,356 Total 50,304 57,888 44,074 48,356 6. Long term loans Consolidated Company 30 June 31 December 30June 31 December 2000 1999 2000 1999 Baht' 000 Baht' 000 Baht' 000 Baht' 000 Loan from financial institutions 193,263 381,458 30,000 - Less Current portion of long- term loans - (251,460) - - Total 193,263 129,998 30,000 - 6. Long term loans (continued) The movements in the borrowings can be analysed as follows: For the six-month period ended 30 June 2000 Consolidated Company Baht' 000 Baht' 000 Opening amount 381,458 - New borrowing 30,000 30,000 Repayment of borrowings (16,025) - Sale of liabilities in a subsidiary (Note 11) (202,170) - Closing amount 193,263 30,000 The Company's long-term loan is a Thai Baht loan from local financial institutions.The terms of repayment are in proportion to the time of release of mortgage by the company upon transfer of land to the customers. The above repayment schedule is based on the longest repayment due from customers. The loans bear interest at the rate of Minimum Lending Rate (MLR) plus 0.25 per annum. The loan is secured by the mortgage of the Company's land held for development. The Group's long-term loan is a Thai Baht loan from local financial institutions.The terms of repayment are in proportion to the time of release of mortgage by the company upon transfer of land to the customers. The above repayment schedule is based on the longest repayment due from customers. The loans bear interest at the rates of 5.00% - 9.00% per annum (1999: 5.00% - 14.50% per annum). These loans are secured by the mortgage of land and assets included in project development costs of subsidiaries. During the 2nd quarter of 2000, a financial institution extended the repayment period to the Group amounting to Baht 41 million for another year. 7. Long-term bonds On June 6, 1994, the shareholders at the Extraordinary Meeting passed a resolution to approve newly issued 8% non-convertible bonds totalling Baht 500 million at par value of Baht 1,000.00 each. Interest was paid semi-annually. The bonds were due for redemption on 15 June 1998. As of 31 December 1999, the Company issued new convertible debentures to settle the above non-convertible bonds issued on 6 June 1994. A total of 425,000 convertible worth Baht 425 million had been converted into 12.75 million common shares of the company following the debts restructuring. As at 30 June 2000, a total of outstanding non-convertible bonds where the original bondholders have not exchanged for new convertible bonds amounted to Baht 30 million. At present, one of the bondholders has sent a notice to the Company to request for full settlement of his bond principal of Baht 15 million. 8. Other current liabilities Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 Accrued interest expenses 7,765 97,929 7,693 6,507 Accrued expenses 8,403 7,157 6,369 5,978 Others 34,780 37,469 6,393 6,993 Total 50,948 142,555 20,455 19,478 9. Share premium Share premium included an amount of Baht 297.5 million incurred from the conversion of Convertible Debentures ("CD") to 12.75 million shares of the company between October 1999 to December 1999. In 1999, the company issued 425,000 units of the CD for the settlement of the non-convertible bonds totaling Baht 425 million which were due for payment in 1998. The CD could be converted at the ratio of 1 debenture to 30 common shares (at a conversion price of Baht 33.33 per share). The Company recorded the issue and conversion of CD by presenting the difference between ordinary share par value and the conversion price totaling Baht 297.5 million under "Share premium". Should the transactions be recorded in accordance with the Thai Accounting Standards No. 34 - Accounting for Debt Restructuring, based on the substance of this debt restructuring, by recording common shares issued at the fair market value of the share, this would result in the decrease in share premium by Baht 297.5 million and an increase in share discount of Baht 25.3 million. There would be gain on debt restructuring in 1999 of Baht 322.8 million and the Company's deficits as at 1 January 2000 and 30 June 2000 would decrease by the same amount. However, the different accounting treatments adopted have no impact on the total shareholders' equity. 10. Cash flows from operating activities For the six-month period ended 30 June 2000 and 1999 Reconciliation of net profit (loss) to cash flows from operating activities: Consolidated Company 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 Net profit (loss) for the period 42,449 (134,411) 42,449 (134,411) Interest expense 26,175 133,995 5,203 57,132 Minority interest (321) (80) - - Profit (loss) before interest expense and income tax 68,303 (496) 47,652 (77,279) Adjustments to reconcile net profit (loss) to net cash generated from operating activities: Gain from sale of investment in a subsidiary (65,895) - (65,895) - Gain from debt forgiveness by construction contractor (17,171) - - - Depreciation and amortization 6,942 24,900 4,351 16,299 (Gain) loss on sale of property and equipment 11 (377) 10 (377) Withholding tax written off 6,279 - 2,052 - Gain from cancelled contract - (53,120) - (6,336) Loss from cancelled land deposit - 32,940 - 32,940 Share of loss in subsidiaries - - 8,144 52,039 Changes in operating assets and liabilities - short term investments 15 (6) 15 (6) - trade accounts receivable 147 6,441 47 1,821 - unbilled completed work 8,151 40,882 (933) 13,377 - loans and advances to related companies - - (14,173) (26,129) - Inventories 2,850 - - - - real estate development cost 9,490 137,987 5,149 45,393 - other current assets (6,878) 524 (580) 185 - other assets 3,099 335 1,363 1,017 - accounts payable-construction (11,498) (25,688) - (7,348) - deposits and advance received from customers (1,003) (33,333) 716 (8,378) - other current liabilities 511 (12,423) (25) (2,297) - other liabilities (184) (186) (573) (186) Cash flows from operating activities before interest payable and income tax 3,169 118,380 (12,680) 34,735 Cash for interest payment (10,647) (29,557) (3,932) (12,786) Cash generated from (used in) operating activities (7,478) 88,823 (16,612) 21,949 11. Disposal of subsidiary In June 2000, the Company disposed of Ban Siam Co., Ltd., a subsidiary, to a third party. Details of assets and liabilities on the date of disposal including proceed on sale are as follows: Baht '000 Cash 1 Land held for development 215,552 Property and equipment - net 25,909 Other assets 1,102 Long term loan (202,170) Other liabilities (106,089) Net liabilities (65,695) Gain on sales 65,895 Proceed on sale of subsidiary 200 12. Prior year adjustments The company has adjusted the financial statements as at 31 December 1999, to reflect the adjustments on prior year errors as follows: Consolidated Company Baht'000 Baht'000 a) Write off of deferred tax liabilities 92,221 38,231 b) Impairment charge on fixed assets (82,898) (63,271) c) Adjustment on goodwill amortisation (61,777) - d) Provision for loss from breaching of land purchase and sale contract (26,000) (26,000) e) Impairment of assets anticipated to receive from debt settlement (51,316) (49,369) f) Adjustments for written off of assets (20,752) (18,121) g) Adjustment in share of results in subsidiaries resulting from the above prior year adjustments - (31,992) (150,522) (150,522) a) The Company and its subsidiaries reversed their deferred tax liabilities because the main temporary differences between tax and accounting profit did not exist since 31 December 1999 and the Company and its subsidiaries have a substantial amount of taxable losses for several consecutive years. b) The Company and its subsidiaries recorded an impairment charge on property and equipment amounting to Baht 82.9 million to reduce the book value of their property and equipment to the value appraised by an independent appraiser in June 1999. c) The adjustment on goodwill incurred from the acquisition of subsidiaries amounting to Baht 61.8 million between 1994 and 1995 which was calculated based on the differences between purchase considerations and the subsidiaries' net book values, not the net fair values of the subsidiaries. d) The adjustment on the provision for loss from the forfeiture of land purchase deposit as the company defaulted in payment of the remaining land price due for payment since April 1998. e) The Company and its subsidiaries recorded an impairment charge on assets to be repossessed from the breach of a purchase contract by its customers to the consolidated and company financial statements amounting to Baht 30.9 million and Baht 29.0 million, respectively. In addition, the Company recorded a provision for impairment in value of assets expected to be received in settlement of loan to a shareholder amounting to Baht 20.4 million. 12. Prior year adjustments (continued) f) The Company and subsidiaries wrote off assets which comprise: * Half-year prepaid tax of 1993 which was over due for claim from the Revenue Department. The adjustments were made to consolidated and company financial statements amounting to Baht 4.5 million and Baht 3.4 million, respectively. In addition, the Group adjusted for impairment of assets comprising promissory notes and interest receivable from financial institutions which were permanently closed by the Ministry of Finance on 8 December 1997. The adjustments recorded to the consolidated and the company financial statements amounted to Baht 4.6 million and Baht 3.1 million, respectively. * Provision for impairment of investments in an associate that temporarily ceased its operation totaling Baht 3.2 million and other investment amounting to Baht 5 million. * Write off of a design program and related assets used specifically in the project which was closed since 1999 amounting to Baht 3.4 million. The above adjustments may have an impact on the operating results in several accounting periods in the past. However, the management is of the opinion that the costs to be incurred in determining the correct periods to which those adjustments belong to would not outweigh the benefits to be derived from obtaining such information. Therefore, all adjustments have been made to the last quarter of 1999. 13 Related party transactions The following transactions were carried out with related parties : a) Management fee income For the six-month periods ended 30 June Company 2000 1999 Baht'000 Baht'000 World Time Holding Co.,Ltd. 169 3,130 Wipa View Co.,Ltd. 170 601 Noble Property Management Co.,Ltd. 106 216 Bang Plee View Co.,Ltd. 80 85 Ban Suk Sabia Co.Ltd. - 51 Total 525 4,083 13. Related party transactions (continued) b) Investments in and loans to subsidiaries Investments in subsidiaries Company Paid-up Percentage of holding Share capital By the group 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Principal Million Million Activities Baht Baht Percent Percent Wipa View Co., Ltd. Real Estate 200.0 200.0 100.00 100.00 Continental City Co.,Ltd. Real Estate 40.0 40.0 100.00 100.00 World Time Holding Co., Ltd. Real Estate 15.0 15.0 100.00 100.00 Bang Plee View Co., Ltd. Real Estate 10.0 10.0 100.00 100.00 Research & Consultant Co., Ltd. Real Estate 10.0 10.0 65.00 65.00 Ban Suk Sabai Co., Ltd. Real Estate 2.0 2.0 100.00 100.00 Ban Siam Co., Ltd. Real Estate - 102.0 - 100.00 Company Investment value at cost 30 June 2000 31 December 1999 Baht'000 Baht'000 Investments in subsidiaries Wipa View Co., Ltd. 198,493 198,493 Continental City Co., Ltd. 42,783 42,783 World Time Holding Co., Ltd. 60,000 60,000 Bang Plee View Co., Ltd. 12,963 12,963 Research & Consultant Co., Ltd. 6,500 6,500 Ban Suk Sabai Co., Ltd. 1,000 1,000 Ban Siam Co., Ltd. - 102,000 In the 2nd quarter of 2000, the Company disposed of a subsidiary, Ban Siam Co., Ltd, to a third party. Details of the disposal are disclosed in the note to financial statement No. 11. 13 Related party transactions (continued) b) Investments in and loans to subsidiaries Company 30 June 2000 (Baht '000) Advances and Less: Investment Net liabilities Net short-term Net investments (more)